IMPS vs NEFT: Difference Between IMPS and NEFT Fund Transfer

Difference Between IMPS and NEFT

The main difference between IMPS and NEFT lies in their transaction timing and processing: IMPS enables real-time transfers 24/7, making it ideal for urgent payments, while NEFT processes transactions in batches during banking hours, typically settling them at the end of the day. 

IMPS generally allows higher transaction limits and is available on weekends and holidays, whereas NEFT is not available during these times. Below is a detailed comparison of both services based on various parameters:

It is worth mentioning that RTGS vs NEFT is another concept that you should be aware of for conducting online transactions.

What is IMPS (Immediate Payment Service)?

IMPS is a system that allows online money transfers between different banks using mobile devices, Internet banking and ATMs. It is available 24/7 (even on holidays), ensuring that money is credited to the beneficiary’s account instantly.

IMPS was launched by the Indian government in 2010 as a pilot project, and since then, many banks have joined the system.

 Related Read: What is the IMPS Transfer Limit Per Day?

To use IMPS, you need to follow the below-given steps –

1. Connect to your bank’s mobile or Internet banking service and add the beneficiary’s details, such as name, account number, IFSC and mobile number.
2. Select the account from which you want to transfer money, enter the amount and confirm the transaction by clicking on the payment links.
3. You will receive an OTP on your registered mobile number, which you must enter to approve the transaction. You will also get a confirmation message with a unique transaction reference number.

IMPS is a fast, secure and convenient way of transferring money, especially for small and urgent payments. It is also cheaper than other fund transfer modes, as the transaction charges are nominal. You can transfer any amount, even Re 1, to people using the same bank as yours, or a different bank.

What is NEFT (National Electronic Funds Transfer)?

NEFT is a system that allows fund transfers between accounts enabled for NEFT. It was initiated in 2005 and is maintained by the Reserve Bank of India (RBI). It operates through electronic messages and is available round-the-clock, 365 days of the year.

To use NEFT, you need to follow the below-given steps –

1. Fill out an application form with the details of the beneficiary and authorise the branch to debit your account and transfer the amount. 
2. The branch then sends the message to its pooling centre, which forwards it to the NEFT Clearing Centre operated by the RBI.
3. The Clearing Centre aligns the transactions bank-wise and makes accounting entries for the banks participating in the system. It then sends the messages to the destination banks, which credit the amount to the beneficiary’s account.

NEFT’s money transfer features include safety, low cost, high reliability and faster fund movement.

Now that you understand what is IMPS and NEFT, let’s discuss the distinctions between them.

Which One Should You Choose: NEFT or IMPS?

When deciding between NEFT and IMPS for your fund transfer needs, consider the following factors:

1. Urgency of Transfer:

• Choose IMPS if you need to make an instant payment, especially outside regular banking hours, as it allows 24/7 real-time transfers.
• Choose NEFT if you can wait for the transaction to settle, as it processes transfers in batches and may take a few hours.

2. Transaction Amount:

• Choose IMPS for higher-value transactions (up to ₹5 lakhs per transaction), making it suitable for urgent payments like bills or emergency expenses.
• Choose NEFT if you are transferring larger amounts without a limit imposed by the bank, as it is suitable for large transactions made during banking hours.

3. Frequency of Transactions:

• Choose IMPS if you make frequent small-value payments or need to transfer money often, as it offers convenience and immediate processing.
• Choose NEFT if your transactions are infrequent and can be planned during banking hours, making it more suitable for occasional large payments.

4. Cost Considerations:

• Choose IMPS if you require immediate funds transfer and are willing to pay slightly higher fees, which can range from ₹2.5 to ₹25, depending on the bank and transaction method.
• Choose NEFT if you prefer a cost-effective option for non-urgent transfers, especially since the RBI has removed service charges for online NEFT transactions for savings account holders.

5. Payment Method:

• Choose IMPS if you prefer mobile-based transactions or need to make peer-to-peer (P2P) payments using just mobile numbers and MMIDs.
• Choose NEFT if you are comfortable entering bank details and prefer the option to complete transactions both online and offline.

Conclusion

Technology has had an immense impact on the way we bank today. Online fund transfers via IMPS and NEFT have eliminated the need to visit bank branches and wait in long queues. These electronic transfer methods allow you to transfer money using smartphones, NetBanking and ATMs.

While IMPS is instant and available 24/7, it has a maximum fund transfer limit of Rs. 5 lakhs per transaction. On the other hand, NEFT does not have an upper limit for fund transfers, but might take up to 2 hours for completion.

Related Read: What Is IMPS Reference Number and How Can You Track It?

Frequently Asked Questions

1. Which is better – IMPS vs NEFT?

The answer to this question depends on your need and purpose of transferring money. Both these services enable you to transfer money electronically from one bank to another.

2. Which is faster – IMPS or NEFT?

IMPS is faster than NEFT as it transfers funds instantly. NEFT, on the other hand, takes some time as it settles funds in hourly batches.

3. Is IMPS transfer free?

No, IMPS transfer is not free. It involves a nominal charge that the respective bank decides. The charge typically ranges from Rs. 2.5 to Rs. 25, plus GST, per transaction. However, some banks may offer IMPS transfers for free as a promotional or value-added service.

4. What is the limit of NEFT and IMPS?

There is no specific minimum limit for both NEFT and IMPS transfers. However, there is a difference in the maximum limit. IMPS transfers have a maximum limit of Rs. 5 lakhs per transaction, whereas NEFT transfers have no limit. You can transfer any amount using NEFT, except for cash-based remittances from India to Nepal, which have a limit of Rs. 2 lakhs per transaction.